Strategic thinking: what is this soft skill, why is it needed, and how to develop it

Before understanding strategic thinking as a soft skill, let’s deal with the terms “system” and “strategy.”

System

These are various interconnected elements that form a whole. The system performs specific functions. For example, a campus is a system of facilities and communications for accommodating students while studying at a university.

Strategy

It is a plan to achieve a big goal after a specific time (for example, 3, 5, or even ten years). The strategy takes into account changes in external conditions. It contains various scenarios of possible development of events and a clear set of stages.

Systems and strategic thinking help us perceive, analyze, develop and adjust plans and strategies.

Systems thinking is a soft skill that helps to:

  • Understand the system, and determine its functionality.
  • Decompose the system into elements and analyze how the components interact.
  • Determine the weaknesses of the system.
  • Optimize an existing system or develop an improved design.

Strategic thinking is a soft skill that helps to:

  • Assess the situation as is.
  • Predict the development of the situation over time.
  • Understand which factors influence the result and which elements are unnecessary.
  • Determine what goal to achieve.
  • Determine the tools and resources needed to achieve the goal.

Usually, systems and strategic thinking are inextricably linked. For example, we must understand the business as a system when drawing up a strategy. Will this system be effective enough to achieve the strategic goal?

When we analyze and optimize the system, we must consider that the system is affected by time and external factors. And our strategic thinking helps to understand how the system will change and what tools we use to optimize the system.

Benefits of systems and strategic thinking skills

Strategic thinking in business:

  • These soft skills allow you to understand the business as a system, identify critical elements, identify inefficiencies and pain points, and understand how to improve the business.
  • Develop an image of the future business and check whether the company will cope with external changes.
  • Understand what business goals can be achieved.
  • Determine the end goal and milestones.
  • Determine what needs to be done or changed to achieve the goal.
  • Calculate costs.

Strategic thinking in your personal life:

  • Understand what is happening outside and adjust personal goals to external conditions.
  • Remove from life unnecessary at the moment.
  • Achieve more meaningful results.
  • Make fewer mistakes.

Case example: where and how systems and strategic thinking are used

The task is to draw up an annual sales plan for the business for the next five years.

  • Assess the market size: what is it now? Describe the market in money, tons, and so on. Determine the production capacity of the business and the maximum possible output. Calculate the total market share that the company can occupy.
  • Identify trends that affect the market where the company plays. Estimate how the market will increase or decrease in 5 years. Electric cars are growing, while the demand for glossy magazines is diminishing. Use open sources, agencies’ analytical reports, and market players’ interviews.
  • Check if the company can reach 100% production capacity in 5 years. Determine what market share the company will occupy in this case. Compare this figure with competitors.
  • Make a sales plan each year to achieve the highest possible market share in 5 years.
  • Create a list of clients if they are already known. Determine how much sales should be targeted for each customer, given the size of that customer. Determine what commercial, special other conditions need to be provided to customers.

Other soft skills will help you with this: analytical skills, working with large data arrays, decomposition, and empathy for interviews.

How to develop systems and strategic thinking

Select any business process or unit and draw its flowchart or function map.

For example, a business process can be broken down into significant steps first; each major step can be broken down into smaller steps and depicted as a flowchart. Write for each element of the scheme what resources and conditions are needed to implement each process.

In any life tasks, try to formulate what will happen next if...?

Example: I tell my boss about my work results. What if I make a spreadsheet in excel? What if I make a presentation? Images will gradually form in my head — how events can develop. At first, you will be able to predict 1 step. Then two, then three, and so on.

You will learn to consider more and more factors when predicting your future. Move from simple life situations to more complex ones. Try to make a rational, logical forecast.

Try understanding the reasons for what happened through the “Five Whys” technique.

Example:

— I ran across the road at a red light. Why?

— Because he was late for work. Why?

— Because I woke up late. Why?

— The alarm didn’t work. Why?

— The phone was put on charge at night and did not charge. Why?

— The charging cord is broken.

Five questions “Why?” Learn how to build cause-and-effect relationships. And that means predicting the future.

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